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TSA cites improved security at Manila international airport

INSPECTORS from the Transportation Security Administration (TSA) of the US Department of Homeland Security were satisfied with improved security measures now being enforced at the country’s main gateway, the Ninoy Aquino International Airport (NAIA), Philippine airport authorities said on Sunday.

TSA and aviation security auditors from the Office for Transportation Security (OTS) wrapped up their latest security audit of terminals and US-bound airlines operating at the Manila airport on Feb. 7, the Department of Transportation, Manila International Airport Authority (MIAA) and OTS said in a joint statement.

TSA, an agency of the US Department of Homeland Security, has authority over the security of the traveling public in the US.

“TSA extended their gratitude to the Philippine government as it also announced that it was satisfied with the security improvements being made by the Philippine government to assure the safety of air travel from the Philippines to the US and vice versa,” airport authorities said.

“Overall, there were no findings in this assessment,” TSA lead inspector Jose Liriano said in the statement. “We appreciate the new technologies and equipment provided. We are grateful with the improvements made by the government specifically in collaboration with the OTS.”

Airport authorities said TSA was “impressed” with NAIA’s new security and screening equipment.

They also said NAIA terminals had “scored high” in the assessment that covered areas such as airport and aircraft security, aviation security management, landside security, passenger and baggage screening, hold baggage screening, access control, perimeter security, training of security personnel and quality control measures.

“Security is a commitment, it is a continuous process,” Transportation Secretary Arthur P. Tugade said.

“We are happy with this news and we must remember that the more important thing is that we sustain and consistently improve our efforts to ensure the safety and security of the passengers,” he added.

MIAA General Manager Eddie V. Monreal said this was a welcome development, adding that they would continue to promote a strong, sustainable, and consistent culture of security. — Arjay L. Balinbin

SEC urges companies to issue more green bonds

THE corporate regulator wants more companies to issue green and sustainable bonds, where the proceeds will be exclusively applied to eligible environmental and social projects.

In a statement over the weekend, the Securities and Exchange Commission (SEC) said the Philippines was expected to join its peers in the Association of Southeast Asian Nations (ASEAN) in spurring the growth of sustainable debt markets.

“The rate of growth in Asean appears to show the necessary foundations for the development of such a green/sustainability debt market have indeed been laid,” SEC Commissioner Ephyro Luis B. Amatong said in the statement.

These foundations include a clear set of guidelines for issuers and which local and international investors recognize as holistic and reliable, he said.

The statement was from Mr. Amatong’s speech at the Asean+3 Bond Market forum meeting last week, where he reported that more than $3.8 billion worth of bonds had been sold under the Asean Green and Sustainability Bond Standards in 2019.

The Philippines had 15 bond issues from companies and banks worth $3.04 billion under the Asean Green and Sustainability bond market.

The SEC cited Rizal Commercial Banking Corp. (RCBC) for having issued two sustainability bonds and one green bond worth $742 million.

Bank of the Philippine Islands issued one green bond worth $300, while Development Bank of the Philippines sold a green bond worth $352 million, the regulator said.

“We at Asean Capital Markets Forum see this as an opportunity for Asean countries, many of which have significant infrastructure development programs, to access as yet untapped sources of much needed financing,” Mr. Amatong said.

“Resilient and adaptable infrastructure is particularly important to those of us in Asean since we are particularly at risk to the impact of climate change,” he added.

Mr. Amatong in February last year said there was a strong demand for green bonds that local companies could take advantage of amid the government’s infrastructure push and after relaxed rules on bank bond issuance.

The SEC earlier said projects that could be funded by ASEAN green bonds include renewable energy, pollution prevention and control, clean transportation and climate change adaptation.

Mr. Amatong had said the Philippines was an ideal destination for sustainable investment given the country’s established renewable energy industry and significant infrastructure demand.

In his speech last week, Mr. Amatong noted that in the past two years, the Philippines had worked to adopt and release guidelines and standards on the issuance of sustainable bonds, such as the Asean Green Bond Standards, Asean Social Bonds Standards and Asean Sustainability Bonds Standards.

Its new corporate governance code for public companies and registered issuers also requires companies to start reporting nonfinancial performance and sustainability initiatives.

“All this is to say that we think that ASEAN is off to a good start in its sustainability journey,” Mr. Amatong said.

“But there is still so much we can do, and so much we need to do to realize our shared goal of sustainable economic growth in the real economy supported by sustainable capital markets,” he added. — DAV

New ‘Velocity’ editor

STARTING THIS MONTH, Kap Maceda Aguila will take charge of BusinessWorld’s motoring section “Velocity” from Manny de los Reyes.

Mr. Aguila has been writing for national publications since 1992 after graduating that same year from the University of the Philippines-Diliman, where he majored in journalism. In 1998, he joined the Philippine Star’s lifestyle section first as a staff writer, then as a sub-editor.

He moved to the corporate world in 2002 while continuing to write for the publication’s tech, business, motoring and entertainment sections.

Mr. Aguila first wrote for the Star’s motoring section in 2001, and was involved as a segment host, writer and producer of its offshoot show Wheels, which aired on ABS-CBN Sports and Action. In 2018, he was named head writer of the show that then ran on Cignal TV’s OneNews channel.

In May last year, the Star opened Wheels.ph, a motoring and transportation website, and made Mr. Aguila its first online editor. Mr. Aguila now leaves this post to join Velocity, while he continues to write for the Star.

He also co-hosts motoring, tech and lifestyle show Gear Box on Radyo Pilipinas 1 738 AM (5 to 7 p.m. on Thursdays) with Eric Tipan and Nana Nadal.

How does the Philippines compare with other Asian economies in terms of intellectual property enforcement and protection?

THE Philippines’ score improved by nearly four percentage points in the US Chamber of Commerce’s (USCC) 2020 International Intellectual Property Index, after its implementation of additional anti-counterfeiting and piracy measures and the addition of new indicators in the index. Read the full story.

How does the Philippines compare with other Asian economies in terms of intellectual property enforcement and protection?

Phinma targets listing of education unit

By Denise A. Valdez
Reporter

PHINMA Corp. is planning an initial public offering (IPO) of its education unit in two to three years.

Ramon R. del Rosario, Jr., president and chief executive officer of the listed firm, told reporters last week that among the company’s plans down the line is listing Phinma Education Holdings, Inc. at the stock market.

“For now I think the funds available to us are adequate for our aspirations. But when the time comes, we are looking forward to listing Phinma Education Holdings and actually doing an IPO, and hopefully that will raise even more funds for us,” he said.

“(That’s in) two to three years, depending on market conditions,” Mr. del Rosario added.

He said Phinma Education is currently the group’s largest business in terms of assets deployed and investments made, as Phinma Corp. disposed of its energy business Phinma Energy Corp. to the Ayalas’ AC Energy, Inc. last year.

Phinma Education contributed P2 billion in the group’s consolidated revenues of P8.4 billion in the first nine months of 2019, higher by 9% year-on-year due to a record enrollment of 74,187 students. Phinma Corp.’s attributable net income during the period jumped 35% to P184.05 million.

“We’re in no real hurry. It’s just that there is an appetite for publicly listed education institutions, we are told. And we think we could use the additional capital if we are successful in expanding our network the way we’re thinking of doing,” Mr. del Rosario said.

The company was able to raise P2.2 billion from local and foreign investors including India’s Kaizen Private Equity II Pte. Ltd., the Netherlands Development Finance Co. (FMO) and the Asian Development Bank. This will be used to expand Phinma Education’s network in the Philippines and abroad, with concrete plans in Indonesia and Laguna for the coming months.

In order to consider the timing ripe for Phinma Education’s IPO, Mr. del Rosario said the company will look for strong enrollment numbers such that the gaps due to the K-12 system have been filled up, and that the overall economy of the Philippines is stable.

Over time, Mr. del Rosario said Phinma Corp. may also consider listing its cement business, Philcement Corp., as it targets to increase its market share to about 10-15% in the next five years.

“Education and construction materials will be the main drivers for our group, supported by property development and hospitality,” he said. “We are serious in the way we’re doing that and investing in strategic facilities.”

Shares in Phinma Corp. at the stock exchange ticked three centavos or 0.30% up to P9.97 apiece on Friday.

Asian palm oil producers label new EU limits a ‘trade barrier’

JAKARTA — Indonesia and Malaysia, the world’s top palm oil producers, accused the European Union on Friday of unfairly targeting palm oil under a plan to impose new limits on levels of contaminants considered harmful to health in vegetable oils and fats.

The EU intends to set new limits for food contaminants in refined oils and fats, including for palm oil, that may have long-term harmful effects on kidneys and male fertility.

Palm oil is widely used in food so the move could hurt demand for its use. The tropical oil is already facing restrictions on its use in transportation fuel in the EU.

The European Commission last year decided that palm oil caused excessive deforestation and should be phased out as source of fuel between 2023 and 2030.

“The EU is raising a trade barrier by trying to formulate an even higher standard. We cannot let this happen,” Airlangga Hartarto, Indonesia’s Coordinating Minister of Economic Affairs, told a palm oil forum in Jakarta.

The EU has imposed a limit for one of the contaminants, glycidyl esters, and will soon impose a limit for another, the 3-monochloropropane diol (3-MCPD). These contaminants can form during the refining process of edible oils.

Hartarto said the limit the EU considers a safe level of 3-MCPD in palm oil will be much lower than the limit imposed on other vegetable oils.

The Council of Palm Oil Producing Countries (CPOPC), a group led by Indonesia and Malaysia, also questioned the different limits.

“They put two levels, one for their oils, one for our oils. In other words, discriminatory,” said Yusof Basiron, the executive director of CPOPC.

CPOPC wants palm oil to have the same safety limit of 3-MCPD as other oils, he said.

Meanwhile, Hartarto said CPOPC must be “more aggressive” in defending palm oil.

Palm oil is one of Indonesia’s top exports, with shipments valued at around $19 billion last year, according to data from the Indonesia Palm Oil Association. Together with Malaysia, the countries produce around 80% of the world’s palm oil, which is used in wide range of goods, from food to cleaning products.

Indonesia has filed a lawsuit at the World Trade Organization against the EU for its anti-subsidy tariffs imposed on Indonesia palm oil-based biofuels exports.

An EU representative in Jakarta was not immediately available for comments.

The European Food Safety Authority said in 2018 that consumption level of 3-MCPD in food are considered safe for most consumers but there is a “potential health concern among high consumers in younger age groups.” — Reuters

PAL’s P897-M tax refund over fuel imports affirmed

THE Court of Tax Appeals (CTA) affirmed the P897.4-million tax refund to Philippine Airlines, Inc. (PAL) over its importation of aviation fuel.

In a 15-page decision in February, the court sitting en banc denied for lack of merit the appeal of the Bureau of Internal Revenue and the Bureau of Custom on the decision of its first division in April 2018.

The court said PAL proved its entitlement for refund after showing that local supply of Jet A-1 fuel is not sufficient.

“The Court En Banc agrees with the findings of the Court in Division that respondent sufficiently proved that its imported Jet A-1 fuel is not locally available in reasonable quantity,” said the decision by Associate Justice Juanito C. Castañeda, Jr.

“Thus, respondent was able to prove its entitlement to refund by completely satisfying the requirements of the pertinent provisions of Section 13 of P.D. 1590. Hence, the Court En Banc finds the dismissal of the consolidated petitions to be in order,” he added.

Under Section 13 of Presidential Decree 1590 that granted PAL its franchise, the airline should prove that it has paid basic corporate income tax or franchise tax, whichever is lower, the imported material were used in its transport and non-transport operations and other incidental activities, and the material were not locally available in reasonable quantity, quality or price.

The court noted its division’s ruling that PAL was able to prove that the fuel was used for its transport operations through the submission of “Authority to Release Imported Goods.”

It also found that PAL met the third requisite because upon the division’s examination of the table on “Supply Demand Balance of Jet A-1 fuel” from the Department of Energy from 2001 to 2010, there is a shortage of locally available supply.

“Wherefore, the consolidated Petitions for Review in CTA EB Case Nos. 1901 and 1916 are dismissed, for lack of merit,” it said.

The court’s division in 2014 initially denied the petition for review of the airline, seeking a refund of the taxes it paid or importation of aviation fuel from February 2003 to December 2004.

Upon the appeal of PAL, the court in April 2018 granted the petition in an amended decision but reduced the refundable amount from P953.8, which was initially claimed by PAL, to P897.4 million.

The amount of P56.4 million was disallowed as it was not supported with import entry internal revenue declarations. — Vann Marlo M. Villegas

A harvest of prints to last years

FILIPINO brand Plains & Prints summons spring with its new collection featuring its signature Spring Harvest prints.

BusinessWorld was at the launch of the collection last week, which featured a botanical print as if pulled from a Rococo catalogue. The print features berries, flowers, and plants in the lush of full bloom.

Roxanne Farillas, Plains & Prints co-founder, explained that the collection appears not just on clothes, but accessories such as bags, hats, and scarves, and is meant to represent the season. “We wanted to come up with a print that’s very youthful, carefree, and very vibrant,” she said.

To channel this youthfulness, the brand also collaborated with Youtube influencer Rei Germar (1.25 million subscribers as of today). Ms. German will appear in some online campaigns for the brand. “We wanted to showcase this Harvest print as very youthful,” said Ms. Farillas.

The brand was founded in 1994 in Greenhills, and this collection was launched at the lobby of SM Mega Fashion Hall, within sight of global fast fashion giants. Asked how the brand remains relevant despite the stiff competition, Ms. Farillas noted, for example, that they’re visible online (on their own website, and on Zalora, Lazada, Shopee, and Amazon), in response to the online shopping boom.

But also, all threads still lead to the product: “We make sure that when people buy Plains & Prints, it’s an investment piece for them. Something affordable yet something that will last them for a few years — not just a season.” — Joseph L. Garcia

Malaysia palm oil producer Sime Darby to work with environmental groups

KUALA LUMPUR — Malaysia’s biggest palm oil producer Sime Darby said on Friday it is committed to working with environmental groups, days after a senior executive called for government action against them.

Franki Anthony Dass, chief advisor and value officer at Sime Darby Plantation — the world’s biggest palm oil company by land size — told an industry forum on Tuesday that non-governmental organizations (NGOs) were orchestrating attacks on palm oil.

“If they are so unfriendly, why allow them to be in our countries Malaysia and Indonesia,” he said. “We have the right to control this and do something drastic for once.”

Indonesia and Malaysia are the top two producers of palm oil, the cultivation of which is blamed for large scale deforestation in Southeast Asia and for endangering wildlife, such as orangutans and pygmy elephants.

Sime Darby said that Franki made his comments in his capacity as chairman of the Malaysian Palm Oil Certification Council, the national sustainability body, and his comments did not refer to all NGOs.

“It was referring to the misbehavior of certain unreasonable NGOs that are trying to discredit painstaking efforts by the industry to raise its sustainability standards via certification such as the Malaysian Sustainable Palm Oil,” the company said in a statement to Reuters, referring to the Malaysian green certificate for palm oil.

Environmental groups, especially in Europe, have called on palm oil producers to be more sustainable.

Sime Darby said it has collaborated with many NGOs in its path to sustainability and will continue to do so.

Palm oil is used in everything from ice cream to lipstick to fuel.

Last year the European Union legislated to phase out palm oil use in renewable fuel by 2030 because of concerns about deforestation.

Producers, though, say palm oil buyers including major consumer goods companies, must share responsibility because they don’t buy enough sustainably produced oil, undermining efforts to reward those who adopt greener practices and reduce deforestation. — Reuters

SEC warns of Champion investment scheme

THE Securities and Exchange Commission (SEC) continues to flag more fraudulent investment groups for offering securities without obtaining regulatory licenses.

An advisory on the SEC website last week warned the public against investing in Champion International Corp./Madenu Champion Marketing International, Inc. (Champion), which it said does not have authority from the regulator to solicit investments.

“[T]he Commission wishes to inform the public that Champion is not authorized to solicit, accept or take investments from the public nor to issue investment contracts and other forms of securities…since it does not have a secondary license issued by the Commission…,” it said.

It said the company operates by inviting the public to invest their money in exchange of a 400% return on investment in more or less than 30 days. It offers a P3,000 minimum entry package with a P100 registration fee, which would reward an investor P3,000-worth of herbal products such as whitening soaps, coffee, healing oil and food supplements.

Other programs collect as much as P30,000 from an investor with a P1,000 registration fee on top, which is supposedly equivalent to a net profit share of P64,800.

Champion also offers a “Fasttrack” option where a member who could recruit 10 people within two weeks may earn extra through profit sharing.

“Those who invite or recruit others to join or invest in such venture or offer investment contracts or securities to the public may incur criminal liability, or otherwise be sanctioned or penalized accordingly,” the SEC said.

It identified the incorporators, directors and officers of Champion as Felicisimo Fallurin Enduma, Jr., Joan Delos Reyes De la Pena, Cyril Fallurin Enduma, Arnold Miranda Alzate and Gilbert Valerio Enduma, Jr.

“[T]he names of all those involved will be reported to the Bureau of Internal Revenue so that the appropriate penalties and/or taxes be correspondingly assessed,” it said.

Under the Securities Regulation Code, violators may be fined a maximum of P5 million or 21 years of imprisonment, or both.

“[T]he public is hereby advised to exercise caution in dealing with any individual or group of persons soliciting investments for and on behalf of Champion,” the SEC said. — Denise A. Valdez

Treasury bill rates likely to drop

RATES OF THE Treasury bills (T-bills) on offer today will likely decline slightly following the central bank’s decision to cut policy rates and hints on another reduction by midyear.

The Bureau of the Treasury (BTr) will auction off P20 billion via T-bills, broken down into P6 billion in 91- and 182-day papers and P8 billion in 364-day instruments.

A bond trader said the papers may fetch slightly lower rates after the Bangko Sentral ng Pilipinas’ (BSP) Monetary Board slashed the rates last week by 25 basis points (bps).

At the Feb. 3 auction, the Treasury made a full award of the P20 billion worth of T-bills it auctioned off as rates mostly declined on strong demand.

It raised P6 billion via the 91-day T-bills as planned at an average rate of 3.187%, 11 bps lower than the 3.297% quoted in the auction on Jan. 27.

The BTr also awarded another P6 billion worth of 182-day papers as programmed at an average rate of 3.964%, up by just 0.1 bp from the 3.963% quoted last week.

For the 364-day securities, it raised P8 billion as planned out of P12.522 billion in bids. The one-year securities were quoted at an average rate of 3.964%, up by 0.1 bp from the 3.963% quoted the prior week.

Yields on the 91-, 182- and 364-day T-bills closed at 3.249%, 3.469% and 3.929% at the secondary market on Friday, based on the PHP Bloomberg Valuation Service Reference Rates.

“Yields of T-bills for auction this week could trend 5-10 bps lower from previous auction following the cut in policy rates on Thursday, coupled with dovish remarks from [BSP] Governor [Benjamin E.] Diokno that another rate cut is still possible by mid-2020,” the trader said via mobile phone message over the weekend.

Following the cut, the reverse repurchase rate now stands at 3.75% while the rate of the overnight lending and deposit facilities are now down to 4.25% and 3.25%, respectively.

In an interview with Bloomberg TV on Friday, Mr. Diokno hinted on another 25-bp rate cut by the middle of the year but said the BSP will remain data dependent.

For UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion, the auction is expected to be met with stronger demand as investors may flock to safer assets like the T-bills.

“With a lot of uncertainties about the impact of the 2019-nCoV, (novel coronavirus) the demand for the T-bills may be stronger than usual. These are safer assets during these times,” Mr. Asuncion said in a phone message.

The Treasury has set a P420-billion local borrowing program this quarter, broken down into P240 billion in T-bills and P180 billion via Treasury bonds.

The government plans to raise P1.4 trillion this year from local and foreign lenders to plug its budget deficit, which is expected to widen to as much as 3.2% of gross domestic product. — Beatrice M. Laforga

Lexus x Grand Seiko event showcases ‘takumi’ affinity

Text and photos by Kap Maceda Aguila

WHAT DO Lexus and Grand Seiko (GS) have in common?

Aside from the obvious, that they’re both premium brands born in Japan, the two also feature vaunted takumi (the Japanese word for “artisan”) craftsmanship in the process of churning out sterling products that are no cookie-cutter creations.

Last week, these values came to fore when the Lexus Manila showroom at the Bonifacio Global City became a meeting place for watch aficionados already cognizant of the virtues of Grand Seiko (or GS).

The event was in keeping with a year-long push for GS as it turns 60. The company flew in master craftsman Takuya Nishinaka, and previewed anniversary pieces for its milestone year. Four limited editions with dials in the signature blue of GS will be locally available soon.

The story goes that in the 1950s, “a small team of Seiko’s finest watchmakers came together with a very simple yet ambitious aim: To create the very best watch of which they were capable, with the highest possible levels of precision, legibility, durability and ease of use.” This dream came to fruition in December 1960, and “grand” was added as a prefix to Seiko to represent the team’s ambition to “create the king of watches.”

At the Lexus Manila showroom, Mr. Nishinaka performed a live demonstration of watch assembly in front of Lexus, GS, and media guests. Displaying amazing dexterity and attention to detail, he worked on completing a GS Snowflake. The timepiece, known to enthusiasts as the SBGA211, has an eye-catching textured dial evoking, yes, snow. In a release, GS says this “unique pattern resembles the snow surface blown by the rough wind in the severe winter of the Shinshu area, where the watch is made.” Mr. Nishinaka is also currently in charge of training a younger generation of watchmakers.

Aside from previewing three of the anniversary watches to be launched here, local distributor Timeplus showcased a range of Grand Seiko pieces which were sold with a 20% discount for the night only.

Three GS collections are currently available. “Heritage” is composed of classic watches evoking the spirit of the earliest Grand Seiko timepieces, “re-interpreted with the very latest movements, manufacturing techniques and craftsmanship.” Meanwhile, “Elegance” is said to convey “strength and resilience to be worn every day while offering a special level of refinement that makes them the perfect choice for those landmark occasions in life where everything has to be just right.” Lastly, “Sports” appeals to people with a more active lifestyle, and features divers’ watches and chronographs.

Lexus Manila president Raymond Rodriguez said to this writer that the hosting of the GS event made sense as there are shared values between the two Japanese brands. “Both feature takumi craftsmanship. The two brands are a perfect fit. It’s all about being particular with design and thinking about customer needs and demands,” he averred.

Mr. Rodriguez added that just as how GS highlights attention to detail, “We at Lexus are passionate about how we execute our cars — the interiors, the leather, the appointments. We’re both about the attention to detail and craftsmanship… It’s not about mass production but personalization.”

In a statement, Timeplus president Karl Dy revealed that aside from the Snowflake, more GS styles will be brought into the country.

For more information, visit www.grand-seiko.com/ph-en, follow Grand Seiko Philippines on Facebook and Instagram (@grandseikophilippines). Seiko boutiques are located on the ground floor of Glorietta 1 of the Ayala Center in Makati City, second floor of SM Aura Premier in Taguig City, and third floor of SM Seaside Cebu.

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